UNITED STATES OF AMERICA, Plaintiff, Appellee, v. PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY, Defendant, Third-Party Plaintiff, Appellant, v. BECKMAN COULTER, INC.; SYSTEM ENGINEERING LABS, INC.; COULTER REAGENTS, INC; SOLAR MAT OF PUERTO RICO COMPANY, INC.; PUERTO RICO HOUSING DEPARTMENT;
No. 19-1874
United States Court of Appeals For the First Circuit
November 17, 2021
Before Lynch and Selya, Circuit Judges, and McCafferty, District Judge.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Francisco A. Besosa, U.S. District Judge]
Juan Rafael Gonzalez-Munoz, with whom Juan J. Casillas-Ayala, Diana M. Batlle-Barasorda, and Gonzalez Munoz
Ellen J. Durkee, Attorney, Environment and Natural Resources Division, United States Department of Justice, with whom Jonathan D. Brightbill, Principal Deputy Assistant Attorney General, Eric Grant, Deputy Assistant Attorney General, Anna T. Katselas, Mark A. Gallagher, Richard S. Greene, and Catherine Adams Fiske, Attorneys, Environment and Natural Resources Division, United States Department of Justice, and James Doyle and Henry Guzman, Attorneys, Office of Regional Counsel, Region 2, United States Environmental Protection Agency, were on brief, for appellee.
LYNCH, Circuit Judge. In September 2015, the United States brought a civil action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA“),
The district court entered three separate summary judgment opinions and orders against PRIDCO. It first found the United States had established its prima facie case against PRIDCO for liability under CERCLA. See United States v. P.R. Indus. Dev. Co. (“PRIDCO I“), 287 F. Supp. 3d 133, 141 (D.P.R 2017). Next, the district court concluded that PRIDCO had failed to meet its burdens as to the innocent landowner defense set forth in
PRIDCO appeals from that judgment. PRIDCO‘s primary appellate argument is that the United States did not satisfy the release prong of
I.
A. Legislative Background
Congress enacted CERCLA in 1980 following the discovery of a large, uncontrolled hazardous waste site in Niagara Falls, New York (Love Canal) and the associated pervasive health problems. Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 120 & n.5 (2d Cir. 2010) (citing S. Rep. No. 96-848, at 8-10 (1980)). CERCLA‘s purpose is “to address the serious environmental and health risks posed by industrial pollution.” Atl. Richfield, 140 S. Ct. at 1345 (internal quotation marks omitted) (quoting Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 559, 602 (2009)). It is designed “to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts [are] borne by those responsible for the contamination.” Id. (alteration in original) (quoting CTS Corp. v. Waldburger, 573 U.S. 1, 4 (2014)).
The statute has created a comprehensive mechanism for the Environmental Protection Agency (“EPA“), through the President, to investigate and respond to the release of hazardous substances, contaminants, and pollutants into the environment. See
CERCLA also governs the process by which the EPA selects its response plan.
Congress also sets strictures for judicial review of the EPA‘s actions. Judicial review of the response action(s) taken or ordered by the EPA “shall be limited to the administrative record.”
B. The Facts
PRIDCO is a Puerto Rican public corporation established in 1942 through Act. No. 188 of May 11, 1942, P.R. Laws Ann. tit. 23, § 273, as amended, with a principal purpose of promoting economic development in Puerto Rico through investment. PRIDCO owns industrial property and constructs facilities for lease or sale to qualified investors. PRIDCO has owned the Property, which is the subject of this action, since at least 1968. The Property is located in the southeastern coastal area of Puerto Rico in the Municipality of Maunabo. The Property contains several buildings or “industrial structures,” which have been leased to numerous tenants for decades, as early as 1969. The tenants have used these industrial structures, inter alia, to manufacture modular circuit prints, biomedical and reactive instruments, solar panels, laminated bedroom furniture, fruit juice, guitars, and prefabricated piping for frame walls.
Adjacent to the southern boundary (and downgradient) of the Property is Maunabo Well #1, one of the four groundwater supply wells operated by PRASA in the area. These wells provide drinking water to approximately 14,000 people living in and around Maunabo. Maunabo Well #1 was installed in 1961, retired in 1974, and returned to service in 2001. In the period between 2001 and 2004, tests conducted by PRASA detected elevated levels of volatile organic compounds (“VOCs“) -- including tetrachloroethene (“PCE“), trichloroethene (“TCE“), and cis-1,2-dichloroethene (“cis-1,2-DCE“) -- in the tap water of its customers from Well #1. Tests in 2002 revealed that the groundwater associated with the well contained the same compounds, with the concentration of PCE exceeding the federal maximum contaminant level. At all times relevant to this case, the EPA has classified these compounds as hazardous substances under CERCLA, and PRIDCO does not dispute the classification. See
Based on extensive groundwater testing, the EPA concluded that the Site contained three distinct plumes of contaminated groundwater. The EPA identified one contaminated plume as the “cis-1,2-DCE plume” (or the “PRIDCO Plume“), which
In 2012, the EPA completed its Final Remedial Investigation/Feasibility Study Report, solicited and considered public comments on a proposed response plan, and held a public meeting on the matter. PRIDCO participated in the comment period by contesting its designation as a PRP. PRIDCO otherwise did not challenge the proposed response plan. The EPA rejected PRIDCO‘s concerns because “site related contamination was detected in the groundwater on the [PRIDCO] property and immediately downgradient [thereof],” which follows the direction the groundwater flows.
After studying the environmental conditions at the Site, evaluating various cleanup options, and considering the public comments, the EPA issued the ROD in 2012. The EPA concluded that the “site-related groundwater data contamination . . . does pose a significant threat to human health or the environment; therefore, remediation is necessary.” The EPA conducted a comparative analysis of alternative remedies, which it summarized in the ROD. As to the remedy for the PRIDCO Plume, the EPA evaluated “monitored natural attenuation” and “air sparging/soil vapor extrusion” remedies, among others, based on the nine criteria for evaluation set forth in
The ROD selected the air sparging remedy for the PRIDCO Plume, noting that the remedy would “serve to reduce the concentration of contaminants in groundwater being drawn into the Maunabo [Well] #1, providing protection of human health.” The ROD further reported that the air sparging remedy would “provide the greatest permanent mass reduction of contamination within the cis-1,2-DCE plume within the shortest period of time.” It rejected the remedy of monitored natural attenuation, explaining that, “[i]f natural attenuation does not occur within a reasonable time frame, there is the potential that the concentrations [of contaminants would increase and] enter the Maunabo [Well] #1 in the future, potentially impacting human health.” The EPA also noted that “the total volume of contaminated groundwater . . . might increase if natural attenuation processes are unable to contain the plume.”
At the time the judgment appealed from was entered, the air sparging system had not been constructed.4
In 2015, the United States initiated this action against PRIDCO, seeking reimbursement for the response costs incurred by the EPA in connection with the PRIDCO Plume. PRIDCO filed a third-party complaint against other PRPs, namely, some of the tenants that occupied and operated the Property during the relevant time period and their insurers.5 On the United States’ motion, the trial proceedings were then trifurcated into liability, cost, and contribution phases.
The United States moved for summary judgment as to liability in July 2017 (“Phase I motion“). PRIDCO opposed the motion and requested the deferral of its consideration under Federal Rule of Civil Procedure 56(d) pending further expert analysis of the contested source of the contamination found at the Property. In a 43-page opinion and order entered in December 2017, the district court granted in part and denied in part the Phase I motion, and denied PRIDCO‘s request to defer the motion‘s resolution. PRIDCO I, 287 F. Supp. 3d at 137. The court held that the United States had met its burden, on the undisputed facts, to establish PRIDCO‘s prima facie liability. Id. at 141, 145. It also held that additional expert analysis on this issue was unnecessary. Id. at 139. The court reasoned that “identifying the source of contamination is immaterial to the prima facie liability analysis” when, as here, unnatural hazardous substances are found on the defendant‘s property. Id. at 139; see id. at 144. Subject to a few narrow exceptions, the court explained, CERCLA imposes strict liability on any property owner whose groundwater is contaminated, regardless of fault. Id. at 144. The court added that CERCLA places the burden on the property owner to show a lack of causation as an affirmative defense or exception. See id. at 147-49.
In the same opinion, the district court denied the United States’ Phase I motion as to PRIDCO‘s innocent landowner defense and contiguous property owner exception. Id. at 147-49. The court permitted the United States to renew this challenge to the defense and exception after the completion of discovery. Id. at 148-49.
Following discovery, PRIDCO and the United States filed cross-motions for summary judgment as to the innocent landowner defense and contiguous property owner exception. PRIDCO II, 368 F. Supp. 3d at 329-30, 333. The United States also sought summary judgment as to the amount of response costs owed by PRIDCO (“Phase II motion“) and moved to limit the scope of judicial review of the remedy selected. Id. at 333. In another opinion and order, the district court granted summary judgment in favor of the United States for each defense and exception. Id. at 334-35. The court concluded that PRIDCO fell short of its burden to establish as a triable issue that an unrelated third party was the sole cause of the contamination. Id. at 335-36. The court denied without prejudice the United States’ motion to limit the scope of judicial review and ordered the United States to provide further information on the issue of costs. Id. at 343.
A few months later, the United States filed a Supplemental Report clarifying its cost calculation. In a third opinion and order, the district court granted the United States’ Phase II motion. PRIDCO III, 386 F. Supp. 3d at 165. The court noted that the cost calculation for the motion represented only past costs because the EPA had yet to commence the selected remedy for the Site, but that PRIDCO would be liable for all future costs, as well. Id. at 167. Reviewing the administrative record, the court also concluded that the EPA‘s removal and remedial actions were consistent with the national contingency plan. Id. at 169-70.
On July 17, 2020, the district court entered an amended final judgment, awarding the United States approximately $5.5 million in past response costs and declaring the United States’ entitlement to future response costs consistent with the national contingency plan.6 PRIDCO appeals from that judgment. Phase III of the litigation -- that is, the contribution phase -- has been stayed pending appeal.
II.
Orders granting summary judgment are reviewed de novo, “drawing all reasonable inferences in favor of the non-moving party.” Pac. Indem. Co. v. Deming, 828 F.3d 19, 23 (1st Cir. 2016) (internal citation omitted). Those inferences are drawn based “on the record as it stands, not on litigants’ visions of what the facts might some day reveal.” Finamore v. Miglionico, 15 F.4th 52, 58 (1st Cir. 2021) (quoting Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)).
Summary judgment is appropriate when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Arabian Support & Servs. Co. v. Textron Sys. Corp., 943 F.3d 42, 47 (1st Cir. 2019). A genuine issue exists if “a reasonable jury could resolve the point in favor of the nonmoving party.” Finamore, 15 F.4th at 58 (quoting McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995)). A fact is material if “it possesses the capacity, if determined as the nonmovant wishes, to alter the outcome of the lawsuit under the applicable legal tenets.” Id. (quoting Roche v. John Hancock Mut. Life Ins. Co., 81 F.3d 249, 253 (1st Cir. 1996)).
Review of questions concerning the interpretation of CERCLA is de novo “with appropriate deference given to agency interpretations.” JG-24, 478 F.3d at 32. A court considering issues raised as to the EPA‘s actions “shall uphold the [EPA‘s] decision in selecting the response action unless the objecting party can demonstrate, on the administrative record, that the decision was arbitrary and capricious or otherwise not in accordance with law.”
A. Prima Facie Liability
PRIDCO first challenges the district court‘s entry of summary judgment on prima facie liability in favor of the United States. PRIDCO argues that there remain genuine issues regarding the United States’ prima facie case -- specifically whether there was a “release” of hazardous substance from the Property -- thereby precluding summary judgment. We disagree.
CERCLA states that: “the owner and operator of a facility . . . from which there is a release, or threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable . . . .”
To establish a prima facie case against an owner under § 107(a) of CERCLA, the United States has the burden to prove only that the Property constitutes a “facility” as defined by
CERCLA defines a “release” as “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment.”
Unlike “disposal,” courts have construed the definition of “release” broadly, see Dedham Water, 889 F.2d at 1152, and to include passive migration into the environment, see United States v. CDMG Realty Co., 96 F.3d 706, 715 (3d Cir. 1996) (concluding that Congress used the term “leaching” in its definition of “release” but not of “disposal” to include passive migration only for the former); ABB Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 358 (2d Cir. 1997) (same). The term “environment” includes “ground water” and “drinking water supply.”
As the owner of the Property, PRIDCO is clearly prima facie liable due to the undisputed presence of hazardous substances in its “ground water.”
If that were not enough, the undisputed existence of a contaminated groundwater plume under PRIDCO‘s property that has migrated towards and been “intercept[ed]” by the Maunabo Well #1 drinking water
PRIDCO‘s arguments to the contrary lack merit. PRIDCO focuses on the United States’ allegation that the release occurred “at” PRIDCO‘s property, rather than “from” it as stated by the statute. This argument is misplaced. It is the statute that governs here, not the language used by the United States in its pleadings. As just explained, the undisputed evidence satisfies the “release” element as provided in the statute.
PRIDCO further argues that the use of the word “from” in § 107(a) of CERCLA requires the United States to identify the source of the contamination to establish a prima facie release. That is also incorrect.8 Nothing in the statute indicates the United States has this burden of proof. See Dedham Water, 889 F.2d at 1152; cf. Cnty. of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462, 1473 (2020) (explaining, in the context of groundwater pollution under the Clean Water Act, that “the specific meaning of the word ‘from’ necessarily draws its meaning from context“). Section 107(a) sets forth the four elements the United States must prove to establish its prima facie case. The United States has shown all four elements. Nothing in the provision‘s text requires the United States also to identify the contaminant‘s source.
Further, nothing in § 107(a) of CERCLA limits liability only to those who own facilities from which the contamination originated. Rather, CERCLA holds strictly liable any owner of a “facility” “from which there is a release, or threatened release . . . .”
The legislative history further supports this position. As we observed in Dedham
B. Contiguous Property Owner Exception
There was no error in the district court‘s holding that, on the undisputed facts, PRIDCO had not met its burden to show the contiguous property owner exception. PRIDCO bore the burden to establish the exception “by a preponderance of the evidence.”
(A) [The person] owns real property that is contiguous to or otherwise similarly situated with respect to, and that is or may be contaminated by a release or threatened release of hazardous substance from, real property that is not owned by that person . . .
(i) the person did not cause, contribute, or consent to the release or threatened release; [and]
(ii) the person is not--
(I) potentially liable, or affiliated with any other person that is potentially liable, for response costs at a facility through any direct or indirect familial relationship or any contractual, corporate, or financial relationship (other than a contractual, corporate, or financial relationship that is created by a contract for the sale of goods or services); or
(II) the result of a reorganization of a business entity that was potentially liable.10
PRIDCO has failed to establish a genuine dispute as to whether it is affiliated with whoever caused the contamination. PRIDCO‘s expert witness, Eng. Raul Colon Vicenty, opines that, given the absence of detected contaminants in the soil at the Property, it is not “likely” that PRIDCO caused or contributed to the contamination found in the groundwater. We assume, without deciding, that this expert opinion creates a genuine dispute of material fact as to whether PRIDCO “cause[d]” or “contribute[d]” to the release.
Regardless, PRIDCO‘s assertion of the contiguous property exception fails for the separate reason that it has not shown an ability to prove it is unaffiliated with any other PRP, as required by the second requirement,
C. The Selected Remedy Was Not Arbitrary and Capricious
PRIDCO finally contends that the district court abused its discretion by “de facto” granting the United States’ motion to limit the scope of review by failing to consider at Phase II materials falling outside of the EPA‘s administrative record. PRIDCO argues that, due to that “de facto” grant, it was prevented from challenging the EPA‘s selection of the air sparging remedy which PRIDCO asserts was arbitrary and capricious. PRIDCO again misrepresents the record. There was no claimed “de facto” grant.
Under CERCLA, a responsible party is liable for “all costs of removal or remedial
i. The Court‘s Review of the Remedy Selection Was Properly Limited to the Administrative Record
PRIDCO first argues the district court abused its discretion at Phase II by “de facto” granting the United States’ motion to limit the scope of review of the remedy selection. The United States specifically sought to exclude the opinion of PRIDCO‘s expert, Dr. Konrad J. Banaszak, as to the air sparging remedy; the opinion was submitted six years after the remedy was selected and the ROD was completed. On March 25, 2019, the district court denied the United States’ motion without prejudice. See PRIDCO II, 368 F. Supp. 3d at 343. The United States never renewed the motion and the district court did not thereafter expressly grant it. PRIDCO argues the motion was “de facto” granted in the court‘s May 2019 summary judgment opinion and order because, in that opinion, the court did not consider materials falling outside the EPA‘s administrative record. See PRIDCO III, 386 F. Supp. 3d at 169-70. Relevant here, the district court stated that, generally, judicial review of the agency‘s response action “is limited to the administrative record.” Id. (citing
PRIDCO‘s argument is based on the contention that the court was obligated on these facts to go outside that record to review the selected removal and remedial actions taken by the EPA. Ordinarily, courts do not do so and this case presented no occasion to diverge from that standard practice.
PRIDCO challenges this conclusion, arguing that this case warrants the review of extra-record materials as to remedy selection because post-ROD studies were considered at the liability phase. This is incorrect. Admissibility at the liability stage is governed by the Federal Rules of Evidence. Challenges to the EPA‘s selected response action(s) are subject to § 113(j) of CERCLA. Subject to narrow exceptions not presented here, § 113(j)(1) limits judicial review of the EPA‘s response action(s) to the administrative record. See
ii. The EPA Adequately Considered Alternative Remedies
PRIDCO argues the EPA‘s selection of the air sparging remedy was arbitrary and capricious because there was inadequate consideration of alternative remedies in the ROD. PRIDCO prefers the less expensive remedy of monitored natural attenuation.
PRIDCO again misrepresents the record. The ROD contains a six-page discussion of the EPA‘s various alternatives. That discussion includes a careful comparative analysis between the air sparging remedy and monitored natural attenuation, among others, to determine which remedy would best “protect human health and the environment.” See
Based on these findings, the EPA reasonably selected the active air sparging remedy instead to “accelerat[e] what nature would do,” “promote the degradation in less time,” and “remove the contaminants . . . permanently.” This decision was neither arbitrary nor capricious. See United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 748 (8th Cir. 1986) (“Because determining the appropriate removal and remedial action involves specialized knowledge and expertise, the choice of a particular cleanup method is a matter within the discretion of the EPA.“).
III.
The district court‘s holdings that the United States had made out its prima facie case against PRIDCO for liability; that PRIDCO had failed to meet its burden as to the contiguous property owner exception; and that the United States was entitled to recover $5,491,278.78 in response costs through February 28, 2018, plus post-judgment interest, are affirmed. Costs are awarded to the United States.